Low Austria capacity fed into Hungarian power price spikes – regulator

07 December 2017 15:41 Source:ICIS

More electricity capacity availability on the Austria-Hungary border would have cut back Hungarian power price spikes in the summer, the country’s energy regulator MEKH said in a monitoring report on Thursday.

The watchdog found that an additional 200MW of capacity on the Austrian-Hungarian border would have cut Hungarian power prices by €5.00/MWh on average in July and August.

In the first two weeks of August, more available capacity would have cut back spikes by more than €15.00/MWh, the regulator said.

MEKH said that a lack of sufficient cross-border capacity linking Hungary to cheaper markets restricted imports to more expensive Balkan markets which were struck significantly by low hydro stocks in the summer. This pushed Hungarian power prices to move in line with the more expensive southeast European markets.

The regulator said that traders were also prompted to import from the more expensive Italian market at times of high consumption due to a lack of capacity on the Austrian border. This was another bullish driver of Hungarian prices.

Imports from Slovakia also supported high Hungarian prices as low hydro production in the country and a decrease of available capacity on the Czech and Slovak border lifted Slovak prices.

MEKH found that the impacts of higher import prices and larger demand could have been covered by increasing off-take from gas-fired generators.

But the short periods of price spikes did not make gas-fired capacity profitable enough due to a lack of heating demand and high costs of plants starting, which further supported high prompt power prices.

Based on the findings of the report, the watchdog will analyse the possibility of increasing the flexibility of Hungarian power production in the summer months. david.simon@icis.com

By David Simon